[Cite as Gallenstein v. Testa, 138 Ohio St.3d 240, 2014-Ohio-98.] 

GALLENSTEIN, APPELLANT, v. TESTA, TAX COMMR., APPELLEE. 

[Cite as Gallenstein v. Testa, 138 Ohio St.3d 240, 2014-Ohio-98.] 

R.C. 5741.02(C)(4)—Boat owner qualified for transient-use exception to use 

tax—BTA acted unreasonably and unlawfully in affirming tax 

commissioner’s assessment of use tax. 

(No. 2012-1971—Submitted October 8, 2014—Decided January 22, 2014.) 

APPEAL from the Board of Tax Appeals, No. 2008-A-1340. 

____________________ 

Per Curiam. 

{¶ 1} Cheryl Gallenstein appeals from a decision of the Board of Tax 

Appeals that determined that her “use of the subject boat does not qualify as an 

exempt use, pursuant to R.C. 5741.02(C)(4), because the boat is required to be 

registered, pursuant to the provisions of R.C. 1547.531.” Gallenstein v. Levin, 

BTA No. 2008-A-1340, 2012 WL 5465162, at *5 (Oct. 23, 2012). However, 

because Gallenstein does qualify for the transient use exception contained in R.C. 

5741.02(C)(4), the decision of the Board of Tax Appeals is unreasonable and 

unlawful and is therefore reversed. 

Facts and Procedural History 

{¶ 2} In June 2002, Cheryl and John T. Gallenstein—Kentucky 

residents—purchased a 44-foot Sea Ray Sundancer with twin inboards from a 

private owner in Indiana for $205,000. The Gallensteins did not pay any taxes on 

the boat in Kentucky or Indiana. Neither did they register the boat in either of 

those states. They docked their boat at Lighthouse Point Yacht Club in Aurora, 

Indiana, and titled it in Cheryl’s name. With the assistance of Ruthann 

Eichelberger—a consultant recommended by the seller of the boat—Cheryl 

obtained a certificate of documentation from the United States Coast Guard that 
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lists her as the owner and managing owner, lists Cincinnati as the hailing port, and 

includes an “operational endorsement[]” of “recreation.” They chose Cincinnati 

as the hailing port because they thought it would be recognized if they cruised to 

Florida on vacation. 

{¶ 3} The evidence shows that on one occasion, John Gallenstein used 

an Ohio business to repair a diesel engine that he removed from the boat. It also 

shows that the Gallensteins primarily operated their boat in Kentucky and Indiana 

waters, downriver from Cincinnati, because the water there was cleaner and less 

crowded. Operating the boat downriver also provided them with a more familyfriendly boating experience. Between June 2002 and the end of the 2004 boating 

season, they crossed into Ohio waters between five and ten times when operating 

the boat. In 2005, they operated the boat in the Ohio River once or twice, but it is 

not apparent from the record whether they operated it in Ohio waters during that 

year. On occasion, the Gallensteins cruised upriver with guests to see the 

Cincinnati skyline, watch Cincinnati Reds and Bengals games from the boat, and 

view Cincinnati fireworks displays. During these trips, Cincinnati police stopped 

their boat, boarded and inspected it, reviewed documents, and then permitted 

them to continue boating. 

{¶ 4} John Gallenstein contacted Eichelberger to inquire why the 

Cincinnati police had been stopping his boat and testified that Eichelberger told 

him, “You’re just being harassed by the Cincinnati police. If you don’t want to 

have any problems, I recommend you get an Ohio sticker.” As a result, 

Gallenstein applied for an Ohio watercraft registration and indicated on the 

application that the boat would be principally used in Kentucky and Indiana 

waters. On May 21, 2003, the Division of Watercraft of the Ohio Department of 

Natural Resources (“ODNR”) issued a sticker and a three-year registration 

certificate, listing the boat’s type of use as “Pleasure.” John Gallenstein affixed 
January Term, 2014 

3 

the sticker to the boat, and afterward, they experienced no more instances of 

police boarding their boat. 

{¶ 5} In 2005, however, the Ohio Department of Taxation audited 

Gallenstein, inquiring about her purchase of the boat. Agent Dennis Woolley 

asked Gallenstein for verification that she paid sales or use tax for the boat in 

Ohio or another state and for copies of various documents. Gallenstein responded 

that she did not believe that Ohio taxes were due and provided some of the 

requested documents. She also noted: 

The vessel carries an Ohio watercraft sticker only as a 

precaution. Although the vessel has never been housed or moored 

in Ohio, several times a year I do operate the boat from its housing 

in Indiana to the Cincinnati central riverfront area. In this area, 

part of the Ohio River is within Ohio and part is in Kentucky. As 

boats operated in this area are often boarded and inspected by the 

Port of Cincinnati water officials, I obtain[ed] the Ohio sticker to 

be safe in operating in the area. 

{¶ 6} In reply, Woolley informed her that the fact that she had docked 

and stored the boat at Lighthouse Point Yacht Club “would require you to have an 

Indiana registration and not an Ohio registration. A registration should be 

obtained in the state where you are principally using the waters of that state.” He 

further stated, “[Y]ou will be required to cancel your Ohio Watercraft 

Registration” and provide proof of its cancellation, and he informed her that if she 

failed to provide proof of cancellation, the state would pursue the use tax due. 

Gallenstein tried to cancel the boat’s Ohio registration without success. She 

informed Woolley that staff at ODNR’s headquarters advised her that “the only 
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way to cancel a registration is not to renew the registration upon its expiration” 

and she did not intend to renew the registration after it expired. 

{¶ 7} Woolley replied that Gallenstein’s response “does not satisfy the 

State of Ohio request for proof of tax paid,” and he recommended that the 

department assess a use tax, plus pre-assessment interest and a penalty, based on 

the boat’s having been registered in Ohio. 

{¶ 8} On November 8, 2005, the tax commissioner issued a notice of 

assessment for the audit period of May 1, 2003, through June 30, 2003, assessed a 

use tax of $12,000, imposed an $1,800 penalty, and assessed $1,252.93 in preassessment interest. Gallenstein petitioned for reassessment and requested 

remission of the penalty and the interest, asserting, among other things, that any 

use of the boat in Ohio constituted transient use pursuant to R.C. 5741.02(C)(4). 

{¶ 9} On June 12, 2008, the commissioner issued a final determination 

affirming the use tax, penalty, and interest assessment. The commissioner 

determined that Gallenstein’s use of the boat in Ohio, combined with her 

declaration of Cincinnati as the boat’s hailing port and her registration of the boat 

in Ohio, “created nexus between the boat and Ohio” and that she did not qualify 

for the transient use exception. 

{¶ 10} Gallenstein appealed to the BTA, asserting that the commissioner 

erred by assessing the use tax because she “had no substantial nexus with Ohio” 

and by not applying the transient use exception in R.C. 5741.02(C)(4) and that the 

penalty was improper because the underlying assessment was invalid. 

Gallenstein, 2012 WL 5465162, at *1-2. The BTA affirmed the commissioner’s 

decision, concluding that Gallenstein’s use of the boat in Ohio satisfied the 

definition of use in R.C. 5741.01(C) and that she did not qualify for the transient 

use exception pursuant to R.C. 5741.02(C)(4). 

{¶ 11} Gallenstein has now appealed to this court, urging that her 

registration of the boat in Ohio is not sufficient to create a taxable nexus, that she 
January Term, 2014 

5 

met all the requirements of the transient use exception in R.C. 5741.02(C)(4), and 

that the tax commissioner should not have assessed the penalty, because the 

underlying assessment is improper. 

{¶ 12} The tax commissioner asks this court to affirm the decision of the 

BTA, asserting that Gallenstein’s use and enjoyment of the boat in Ohio waters, 

the rebuilding of the boat’s engine in Ohio, and her registering of the boat in Ohio 

constitute use as defined in R.C. 5741.01(C), and therefore, the boat is subject to 

Ohio taxation. He maintains that Gallenstein does not satisfy the requirements of 

the transient use exception in R.C. 5741.02(C)(4) because she has “actively and 

within her discretion operated [her] yacht on Ohio waters, resulting in such a 

presence within the State that the yacht must be registered with the Ohio Division 

of Watercraft.” (Emphasis added.) And the commissioner claims that her boat 

does not satisfy the requirements of R.C. 1547.531(B)(3), which exempts certain 

watercraft from Ohio registration. 

{¶ 13} Accordingly, the issue in this case is whether the BTA properly 

imposed a use tax on Gallenstein. 

Law and Analysis

{¶ 14} We review a decision of the BTA to determine whether it is 

reasonable and lawful, and we will reverse a decision that is based on an incorrect 

legal conclusion. Satullo v. Wilkins, 111 Ohio St.3d 399, 2006-Ohio-5856, 856 

N.E.2d 954, ¶ 14. “Any claimed exemption from taxation ‘must be strictly 

construed,’ and the taxpayer ‘must affirmatively establish his or her right’ to the 

exemption.” Id. at ¶ 15, quoting Campus Bus Serv. v. Zaino, 98 Ohio St.3d 463, 

2003-Ohio-1915, 786 N.E.2d 889, ¶ 8. In Satullo, we stated that “ ‘[t]he BTA is 

responsible for determining factual issues and, if the record contains reliable and 

probative support for these BTA determinations,’ this court will affirm them.” Id.

at ¶ 14, quoting Am. Natl. Can Co. v. Tracy, 72 Ohio St.3d 150, 152, 648 N.E.2d 

483 (1995). 
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6 

{¶ 15} R.C. 5741.02(A)(1) establishes a use tax and authorizes an excise 

tax “on the storage, use, or other consumption in this state of tangible personal 

property or the benefit realized in this state of any service provided.” Pursuant to 

R.C. 5741.02(B), “[e]ach consumer, storing, using, or otherwise consuming in 

this state tangible personal property or realizing in this state the benefit of any 

service provided, shall be liable for the tax * * *.” 

{¶ 16} R.C. 5741.02(C), however, provides exceptions to the tax and 

states: 

The tax does not apply to the storage, use, or consumption 

in this state of the following described tangible personal property 

or services, nor to the storage, use, or consumption or benefit in 

this state of tangible personal property or services purchased under 

the following described circumstances: 

* * * 

(4) Transient use of tangible personal property in this state 

by a nonresident tourist or vacationer, or a nonbusiness use within 

this state by a nonresident of this state, if the property so used was 

purchased outside this state for use outside this state and is not 

required to be registered or licensed under the laws of this state. 

{¶ 17} R.C. 5741.01 does not define the term transient use. Pursuant to 

R.C. 1.42, this term should be read in context and construed according to common 

usage unless this term has acquired a technical or particular meaning. See 

Cincinnati School Dist. Bd. of Edn. v. State Bd. of Edn., 122 Ohio St.3d 557, 

2009-Ohio-3628, 913 N.E.2d 421, ¶ 15. In common usage, the term transient 

means “passing through or by a place with only a brief stay or sojourn,” and the 
January Term, 2014 

7 

term use means “the act or practice of using something.” Webster’s Third New 

International Dictionary 2428, 2523 (2002).

{¶ 18} In its decision, the BTA, relying on its own precedent, determined 

that the term transient use “ ‘connotes a use of a short or temporary duration’ ” 

and that a period of 60 consecutive days “would seem to be an appropriate and 

reasonable guideline” for determining whether an owner’s use of a boat in Ohio 

had been transient. Gallenstein, 2012 WL 5465162 at *4, quoting Steenrod v. 

Tracy, BTA Nos. 1991-A-1108 and 1991-A-1109, 1993 WL 186521, *3 (May 21, 

1993). The BTA further determined that the record “clearly establishes appellant 

resides in the state of Kentucky and therefore, is a nonresident of the state of 

Ohio.” Id. The BTA also rejected the tax commissioner’s contention that 

Gallenstein was not a tourist or vacationer in this state because of the proximity of 

her residence to her husband’s business in Ohio, stating: 

While the proximity of appellant’s residence to Ohio and 

the location of appellant’s husband’s business in Ohio may 

contradict a characterization of appellant as an out-of-town 

“tourist,” we disagree with the commissioner’s generalization that 

appellant cannot be considered a “vacationer” in Ohio; on the 

contrary, since it is undisputed that the boat is only being used for 

recreational purposes, appellant, when using the boat, can be 

considered a “vacationer” in any location, in any state. A person 

can be designated a “vacationer,” regardless of the proximity of the 

vacation destination to one’s home. Further, appellant and her 

husband testified that the boat had been docked in Indiana since its 

purchase and that they preferred to take the boat to locales other 

than Ohio because of the boat traffic and other environmental 

concerns in Ohio and, as a result, the total number of days in Ohio
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waters since the boat’s purchase in June 2002 was less than sixty 

days. * * * In addition, appellant’s Ohio Division of Watercraft 

registration application acknowledges appellant’s intention to 

principally use the boat in Kentucky and Indiana. 

(Emphasis added.) Id. 

{¶ 19} Based on this reasoning, the BTA concluded that Gallenstein met 

the statutory requirements of the first part of R.C. 5741.02(C)(4)’s test, i.e., 

“[t]ransient use of tangible personal property in this state by a nonresident tourist 

or vacationer, or a nonbusiness use within this state by a nonresident of this state, 

if the property so used was purchased outside this state for use outside this state.” 

However, the BTA determined that Gallenstein did not establish that she was not 

required to register her boat in Ohio. Gallenstein at *4-5. 

{¶ 20} R.C. 1547.531 sets forth the registration requirements for 

watercraft in Ohio. It provides: 

(A)(1) Except as provided in division (A)(2) or (B) of this 

section, no person shall operate or give permission for the 

operation of any watercraft on the waters in this state unless the 

watercraft is registered in the name of the current owner in 

accordance with [R.C. 1547.54], and the registration is valid and in 

effect. 

* * * 

(B) All of the following watercraft are exempt from 

registration: 

* * * 

(3) Those that have been documented by the United States 

coast guard or its successor as temporarily transitting, whose 
January Term, 2014 

9 

principal use is not on the waters in this state, and that have not 

been used within this state for more than sixty days. 

{¶ 21} Registering a boat in Ohio is not the same as being required to 

register a boat in Ohio because R.C. 1547.531(B)(3) exempts from registration 

watercraft that have been documented by the United States Coast Guard or its 

successor as “temporarily transitting.” Despite this exemption provision, the term 

“temporarily transitting” does not appear in federal regulations governing the 

United States Coast Guard’s documentation of vessels, see 46 C.F.R. 67.1 et seq., 

and it is not referred to as an endorsement in the federal regulations, see 46 C.F.R. 

67.17 (registry endorsement), 46 C.F.R. 67.19 (coastwise endorsement), 46 

C.F.R. 67.21 (fishery endorsement), 46 C.F.R. 67.23 (recreational endorsement). 

When the General Assembly enacts a statute, a just and reasonable result and a 

result feasible of execution is intended. R.C. 1.47(C) and (D). In this case, 

because the term “temporarily transitting” does not appear in federal regulations 

governing the United States Coast Guard’s documentation of vessels, the BTA 

unreasonably and unlawfully interpreted R.C. 1547.531(B)(3) when it stated: 

While the appellant’s boat arguably meets the principal use 

and maximum day provisions of the statute, we find no evidence in 

the record that the U.S. Coast Guard has documented the boat as 

“temporarily transitting.” * * * Accordingly, we find appellant’s 

use of the subject boat does not qualify as an exempt use, pursuant 

to R.C. 5741.02(C)(4), because the boat is required to be 

registered, pursuant to the provisions of R.C. 1547.531. 

(Footnote omitted.) Gallenstein, 2012 WL 5465162, *5. 
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{¶ 22} To require Gallenstein to show that her boat has been documented 

as temporarily transitting by the United States Coast Guard when it does not 

appear that the United States Coast Guard issues a temporary transitting 

endorsement is unreasonable because no one could qualify for this exemption. 

And the fact that Gallenstein arguably could have registered her boat in Kentucky 

or Indiana, see Kentucky Rev.Stat.Ann. 235.010 et seq.; Indiana Code Ann. 9-31-

3-1 et seq., militates against the conclusion reached by the BTA that boat is 

required to be registered in Ohio pursuant to R.C. 1547.531. Gallenstein at *5. 

Despite her best efforts, Gallenstein was not able to cancel her Ohio registration 

as ordered by the tax department, and assessment of a use tax on that basis is also 

unreasonable. The fact remains that from 2002 through 2004, Gallenstein 

operated her boat in Ohio waters fewer than a dozen times, and her principal use 

was not on the waters of this state. It is unreasonable and unlawful to assess a 

$12,000 use tax, an $1,800 penalty, and $1,252.93 in pre-assessment interest on a 

Kentucky resident who purchased a boat in Indiana and who harbors it there and 

who chose to register that boat in Ohio to reduce the chances of police boarding it 

on the few occasions she operated it in Ohio waters. 

Conclusion

{¶ 23} Because the BTA acted unreasonably and unlawfully in affirming 

the tax commissioner’s use tax, penalty, and pre-assessment interest, its decision 

is reversed. 

Decision reversed. 

PFEIFER, O’DONNELL, KENNEDY, and O’NEILL, JJ., concur. 

O’CONNOR, C.J., and LANZINGER, J., dissent. 

FRENCH, J., dissents and would affirm the decision and analysis of the 

BTA. 

__________________ 

 
January Term, 2014 

11 

 LANZINGER, J., dissenting. 

{¶ 24} Because I believe that Gallenstein was required to register her 44-

foot Sea Ray in Ohio and has not satisfied the requirements of transient use as set 

forth in R.C. 5741.02(C)(4), I dissent. I would hold that the BTA properly upheld 

the imposed use tax, and I would affirm the decision of the BTA. 

{¶ 25} It is presumed that “every sale or use of tangible personal property 

in Ohio is * * * taxable.” Std. Oil Co. v. Peck, 163 Ohio St. 63, 65, 125 N.E.2d 

342 (1955). As a result, statutes relating to the exemption or exception from sales 

or use taxes are to be strictly construed, and one must affirmatively show a right 

to a claimed exemption or exception. Canton Malleable Iron Co. v. Porterfield, 

30 Ohio St.2d 163, 166, 283 N.E.2d 434 (1972) (cataloguing cases); see also

Campus Bus Serv. v. Zaino, 98 Ohio St.3d 463, 2003-Ohio-1915, 786 N.E.2d 889, 

¶ 8; R. Wantz & Sons Constr. Co. v. Kosydar, 38 Ohio St.2d 277, 280, 313 N.E.2d 

360 (1974). 

{¶ 26} I do not believe that Gallenstein has met her burden of 

“affirmatively proving [her] entitlement” to the transient-use exception. Bay 

Mechanical & Elec. Corp. v. Testa, 133 Ohio St.3d 423, 2012-Ohio-4312, 978 

N.E.2d 882, ¶ 16. The fourth of R.C. 5741.02(C)’s nine exceptions to the use tax 

is at issue here. It states: 

(4) Transient use of tangible personal property in this state 

by a nonresident tourist or vacationer, or a nonbusiness use within 

this state by a nonresident of this state, if the property so used was 

purchased outside this state for use outside this state and is not 

required to be registered or licensed under the laws of this state. 

{¶ 27} To be entitled to the use-tax exemption, Gallenstein was required 

to prove four things: First, that her use of the Sea Ray in Ohio was “transient,” 
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second, that she, as a user of the personal property in Ohio, was a nonresident 

tourist or vacationer or a nonresident who was using the property for nonbusiness 

purposes, third, that the Sea Ray was purchased outside Ohio for use outside 

Ohio, and finally, that the Sea Ray was not required to be registered or licensed 

under Ohio law. 

{¶ 28} I agree with the BTA’s determination that Gallenstein and her 

husband were nonresident tourists or vacationers, Gallenstein v. Levin, BTA No. 

2008-A-1340, 2012 WL 5465162, at *4 (Oct. 23, 2012), and that they 

undisputedly had purchased the boat for use primarily outside Ohio, id. at *5. 

The open questions are confined to the first and fourth requirements. 

The use of the Sea Ray was not “transient” 

{¶ 29} The Revised Code does not define “transient use.” But for 

purposes of use tax, R.C. 5741.01(C) broadly defines “use” to include “the 

exercise of any right or power incidental to ownership of the thing used.” 

(Emphasis added.) The Gallenstein Sea Ray was registered with the Ohio 

Department of Natural Resources (“ODNR”) from May 2003 until March 2006. 

The right to register a watercraft is certainly an incident of ownership, and that 

right was exercised by Gallenstein here in Ohio. 

{¶ 30} Consistent with Webster’s Third New International Dictionary

2428 (2002), which defines “transient” as “passing through or by a place with 

only a brief stay or sojourn,” the BTA concluded that “transient use” “ ‘connotes 

a use of a short or temporary duration.’ ” Gallenstein at *4, quoting Steenrod v. 

Tracy, BTA Nos. 1991-A-1108 and 1991-A-1109, 1993 WL 186521, *3 (May 21, 

1993). After examining statutes on watercraft registration, the BTA chose 60 

days as “an appropriate and reasonable guideline” for determining whether an 

owner’s use of a boat in Ohio is transient. Id. But one “use” that triggers the use 

tax in Ohio is a boat’s registration in Ohio. When a boat is registered in Ohio, 

that registration is effective every single day from the date it is issued until the 
January Term, 2014 

13 

date it expires. The Gallenstein watercraft was registered from May 2003 until 

March 2006. 

{¶ 31} I would hold that no matter how often an owner actually operates a 

boat in Ohio, the operation cannot qualify for the transient-use exception while 

the boat is registered with the ODNR. In other words, the notion of “transient 

use” is incompatible with the holding of an active Ohio registration. Gallenstein’s 

registration of the Sea Ray prevents her use of the boat in Ohio from being 

labeled as “transient,” and she accordingly fails to satisfy the first requirement of 

the transient-user exception. 

The Sea Ray was required to be registered or licensed under Ohio law 

{¶ 32} Furthermore, even if Gallenstein’s use were transient, this would 

satisfy only one requirement under R.C. 5741.02(C)(4). She still must show that 

her Sea Ray was not required to be registered—and this she did not do. The 

statute setting forth the registration requirements for watercraft in Ohio, R.C. 

1547.531, provides: 

 (A)(1) Except as provided in division (A)(2) or (B) of this 

section, no person shall operate or give permission for the 

operation of any watercraft on the waters in this state unless the 

watercraft is registered in the name of the current owner in 

accordance with [R.C. 1547.54], and the registration is valid and in 

effect. 

(Emphasis added.) The exception mentioned in division (A)(2) is inapplicable, 

relating as it does to a temporary registration following the sale of a watercraft. 

Among the exemptions in division (B) is a provision relating to temporary use: 
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(3) Those that have been documented by the United States 

coast guard or its successor as temporarily transitting, whose 

principal use is not on the waters in this state, and that have not 

been used within this state for more than sixty days. 

{¶ 33} The majority emphasizes that the United States Coast Guard does 

not issue any documentation that endorses watercraft as “temporarily transitting.” 

And it concludes that because Gallenstein could not qualify for this exemption, 

she was not required to register her boat in Ohio. Nevertheless, the inability to 

meet the documentation portion of the exemption merely means the exemption 

itself does not apply. It does not invalidate R.C. 1547.531’s clear requirement 

that no person shall operate watercraft in Ohio waters unless the watercraft has 

proper registration. I agree with the BTA’s determination that Gallenstein failed 

to establish that she was not required to register her boat in Ohio. Gallenstein, 

2012 WL 5465162, at *4-5. R.C. 1547.531 clearly requires that watercraft used 

in Ohio must carry valid registration. She has not satisfied the fourth requirement 

of the transient-user exception. 

{¶ 34} Because Gallenstein failed to show both that her use of the Sea 

Ray was transient and that the Sea Ray was not required to be registered or 

licensed under Ohio law, she failed to show that she is entitled to the transient-use 

exception set forth in R.C. 5741.02(C)(4). Accordingly, I would affirm the 

BTA’s determination that the transient-use exception does not apply in this case 

and that Gallenstein is subject to the use tax. 

 O’CONNOR, C.J., concurs in the foregoing opinion. 

____________________ 

 Lindhorst & Dreidame Co., L.P.A., James H. Smith III, and Bradley D. 

McPeek, for appellant. 
January Term, 2014 

15 

 Michael DeWine, Attorney General, and Melissa W. Baldwin, Barton A. 

Hubbard, and Julie Brigner, Assistant Attorneys General, for appellee. 

________________________